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Evaluating Accounting Standards: A Comment on Ramanna’s ‘The International Politics of IFRS Harmonization’

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  • Madsen Paul E.

    (University of Florida, Po Box 117166 210 GER, Gainesville, Florida 32611, United States)

Abstract

Ramanna (this issue) argues that the big question at the centre of IFRS research is: “is the political process underlying IFRS facilitating the production of economically efficient standards?”, and presents new evidence that is informative about the political process underlying IFRS adoption decisions. In this comment, I explore how questions about the economic efficiency of standards might come to be answered. The current expertise-based approach to the evaluation of accounting standards is likely limited because it requires the deployment of expertise where it is likely least valuable, in low-validity/low feedback environments. I propose regulatory field experimentation as a potential alternative means of accumulating the knowledge required to perform effective expertise-based evaluations of standards. But field experimentation could be costly and politically controversial. The proposal to permit multiple accounting standard-setters to compete in a given jurisdiction may be an effective means of reducing the reliance of the evaluative system on expertise, replacing it with market feedback.

Suggested Citation

  • Madsen Paul E., 2013. "Evaluating Accounting Standards: A Comment on Ramanna’s ‘The International Politics of IFRS Harmonization’," Accounting, Economics, and Law: A Convivium, De Gruyter, vol. 3(2), pages 77-92, January.
    • Handle: RePEc:bpj:aelcon:v:3:y:2013:i:2:p:1-15:n:5
    DOI: 10.1515/ael-2013-0031
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    References listed on IDEAS

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